HR Challenges in Franchising – Mitigating Risk is Key

March 1, 2012March 6, 2012 ·

“Employee management and HR compliance is a tricky topic, especially with the relationship between franchisors and franchisees. Depending on what HR support the franchisor can and cannot provide the franchisee may be on their own in this all important area.” These were the words that Dean Haller, President, CEO & Founder at HRSentry, shared with me in a recent conversation we had about HR challenges within franchising. In an effort to provide resources for the franchise community, I asked Dean to provide me with some information to share on the franchisEssentials site. Dean shared the following…

Even seasoned franchisees feel challenged by myriad demands, human resources among them. Most business owners don’t have time to become an expert in human resources management and can’t necessarily afford to hire one. It’s tempting to let some things slide, but doing so can lead to costly mistakes.

The good news is, with a relatively small investment of time, you can minimize your risk. Here are three crucial areas to keep in mind.

1. Hiring Basics

Application Forms. Purchase a template or create your own. Applicants certify their answers are truthful, giving you a legal basis for not hiring, or firing someone who provides false or misleading information on their application. The form highlights any employment gaps you may want to investigate, felony convictions (if inquiring is permitted in your state) and gives you permission to check employment references.

Smart Interviewing. Make sure all the questions you ask are job-related and thus legal. Your goal should be to get more information about prior behaviors, as the past usually predicts the future. Avoid leading questions such as, “This position requires someone who is organized. What traits would you bring?” Instead, it would be better to ask, “Describe a situation in which you had to juggle competing tasks. What was accomplished? How did you get it all done?” Don’t be afraid to ask about employment gaps or other potential red flags. If the candidate’s answers are short, ask for more detail.

Careful Employee Selection. Although fitting in with your work culture is important, you don’t want to hire someone just like yourself. You want diversity in skills and talent within the company, so you want to hire the best performer. Focus on key job skills, especially those that complement yours and others’. It’s essential to contact a candidate’s references. Ask for more information if the person hedges and, as with interviewing, request specific examples. A candidate can have exceptional interviewing skills, but references may reveal another story. Most important, if you haven’t found the right person, leave the position open longer. Hiring the wrong person is worse than hiring no one at all—and can be expensive.

2. Legal Pitfalls

Employment Laws. Know which state and federal laws apply to your business. The Family & Medical Leave Act, for example, applies to employers with 50 or more employees; your state may have a similar law that encompasses smaller organizations. Use the federal I-9 form and comply with your state’s new hire reporting requirements. A third of states require using E-Verify, the online system that compares I-9 information to Social Security and Homeland Security records.

Exempt vs. Non-exempt Status. Classify employees correctly into exempt and non-exempt categories, according to rules established by the Fair Labor Standards Act (FLSA), which governs minimum wage and overtime requirements. Maintain accurate timekeeping and other personnel records and be sure to pay time and a half to non-exempt staff who work in excess of 40 hours per week.

Independent Contractors. Employers may be tempted to misclassify employees as independent contractors to lower costs; or there can be honest confusion due to different definitions of “employee” for varied state and federal purposes. But states and the feds have been cracking down on violators. To protect your business from having to pay fines, penalties, back taxes, and back overtime wages, analyze contractor positions based on IRS rules along with your state’s unemployment and workers’ compensation rules.

3. Employment Best Practices

New Employee Orientation and Training. Place yourself in new employees’ shoes. What information, tools and training do they need to function in your work environment? Studies indicate that most new employees decide whether to stay or leave a company within the first 6 months, so be sure to be welcoming early on to help them feel part of your team. New employees experience lots of new sensory information—from the physical environment to new colleagues and new systems—so provide information in reasonable increments. If you’re thoughtful of your employees’ new experience, they will become more productive and engaged, and thus, more likely to stay.

Nip Poor Performance in the Bud. Communicate expectations clearly and give constructive feedback for improvement. Make sure you provide enough training and support. If your best efforts fail and termination becomes inevitable, don’t procrastinate. Make sure all performance-related reasons are documented clearly. Even in employment-at-will states, it’s important to avoid any perception of discrimination or retaliation. Treat the person with dignity and respect—not only because it’s the right thing to do, but because it’s good business practice and can help you avoid any potential legal action against your business in the future.

Reward Your Best Employees. Make every effort to properly reward good performance. When the company’s financial situation prevents salary increases or bonuses, get creative—provide flexible work schedules, interesting assignments, or a gift certificate to a great restaurant or spa. Be mindful that it’s costly to replace a good employee, so reward your employees with some kind of benefits if you can.

With the daily craze of operating a growing business, it’s all too easy to neglect areas, such as HR, that don’t seem to directly contribute to the bottom line. But making these suggestions part of your company’s operation can help you avoid hassles and greater costs in the future.

For nearly ten years, HRSentry has helped organizations across the country navigate the tricky world of human resources. Their online tools have been developed to save time, resources and money. For more information, visit HRSentry.com or call 1-800-523-2564.

The Focus on Franchise Marketing is Local, Local, Local!

February 4, 2012 · 3 Comments ·

Local appears to be the common denominator in all discussions about marketing in franchise circles. From mobile marketing to social media to software solutions, the discussion always seems to comes back to “local.”. We have even seen Google’s continued shift to complete emphasis on local which has created what appears to be a whole new segment of marketing, local marketing, complete with its own strategies, methodology and tools.

The following is a guest post by Chris Anderson, Co-founder at Empowerkit. Chris enjoys sharing his perspective, insight, and experience whenever and wherever he can as is apparent by his active participation in various franchise LinkedIn groups.

5 Local Online Marketing Support Mistakes Franchisors Should Avoid

Bringing in new franchisees is how franchise systems grow and maintain financial stability, especially early on, and it’s what most franchisors lose sleep over more than anything. But to maintain steady growth, corporate support to existing franchisees plays an essential role – from marketing and advertising, to operations and ongoing training.

All too often, though, franchise support takes a backseat to sales, leaving franchisees feeling alienated from the franchisor and disenfranchised (pardon the pun).

One thing in particular which franchisees are desperately seeking guidance on is online marketing. More specifically, how they can make sure they’re staying competitive online, attracting as many local customers as possible, and generating leads to grow their sales.

Here are 5 common blunders to avoid in franchise local online marketing support:

1. Static Local Websites

Many franchisors, early in the growth process, publish basic landing pages for franchise locations with very little unique local content, and no easy way for the franchisee to make updates. This results in poor search rankings, pathetic conversion rates, and upset franchisees that often go rogue and create their own sites.

What should you do?

Provide a system like Empowerkit, where franchisees can easily make updates to their own websites, within the brand and content controls you set and can oversee at corporate. Make sure the system is flexible and can adapt with your changing needs over time.

2. No Business Listings

Franchisees generally don’t know the first thing about submitting and maintaining their business listings on Google Places, Bing, Yahoo, Yelp, Yellow Pages, and other sites. So, if you don’t give them instructions and best practices, or provide an automated solution, then guess what…there are no business listings for your locations! Complete, comprehensive business listings are a key traffic driver and lead generation source, so don’t make this mistake.

What should you do?

First off, lead by example. Make sure your corporate listing is complete and consistently listed in all of the main search engines and directories. Next, decide whether to engage a specialized vendor, utilize an automated service, and/or provide documentation and best practices.

3. Ignoring Social Media

Whether you love it or hate it, social media is here to stay, and franchisees in almost every industry are trying to figure it out. Franchisors who ignore social media are finding themselves chasing down compliance issues, and seeing dozens of disparate profiles and pages that are poorly managed. Translation – a nightmare for your branding. Worse, they’re missing a great opportunity to gain a competitive edge. Don’t let this be you!

What should you do?

Don’t fight social media, embrace it. It’s the only communication channel that let’s a business directly interact with customers and other stakeholders, which is valuable any type of business. Develop a strategy with defined goals at the local level, layout any necessary policy guidelines, and train franchisees on best practices. Consider working with an outside consultant initially, and remain flexible to adapt your strategy based on results and changing trends.

4. No Attention to Lead Generation Optimization
It’s easy to get lost in what to focus on when it comes to local online marketing, and lose sight of the performance metric that matters the most – lead generation (particularly for service-based franchises). Generating leads is a science, which can always be optimized to bring in more, better qualified prospective customers. In most cases, though, franchisees have little more than a Contact Us page or their phone number and email on their website, and research shows this will produce the lowest possible lead generation results.

What should you do?

Have at least two compelling calls-to-action with connected lead captures on each page of your local websites. One for prospects that are just browsing (i.e. “Free Download: Top Tips for X, Y, Z”) and the other for those who are “sales ready” (i.e. “Schedule a Free Consultation”). Have analytics events set up that track conversion rates, so that you can test and optimize the different lead generation variables over time to continually increase conversions.

5. No Content Marketing Strategy

What’s becoming key to all online marketing efforts is a sound content strategy. That is, understanding what types of content can be created at corporate and the local level to offer customers relevant, valuable answers to their questions, and solutions to their problems, which should directly relate to the franchise’s products and services. Value driven content is what should fuel the ongoing local website updates (and lead capture CTA’s), social media profiles, online ads, and it’s what has the greatest impact on SEO.

What should you do?

Think long and hard about your brand’s culture, story, strengths, and competitive advantages. Then brainstorm your target customers top questions and frustrations as they relate to solutions that your products and services offer. Come up with ideas for content that can address these questions in a compelling way, and that will help amplify your brand online. It may be through blog posts, videos, photos, webinars, or other content, but the point is that you put a strategy in place and start implementing it through your local online marketing efforts.

These are just five common mistakes that franchisors make. Please share other pitfalls to avoid, and let us know if you have any questions!

Franchisee Failure: Logical Reasons or Lame Excuses?

January 29, 2012January 30, 2012 · 2 Comments ·

Some time back, posted on LinkedIn was a discussion about franchising that generalizes negative franchise experiences, places blame for the experiences on “improper practices” and ultimately forces the franchise community to defend its practices, and ultimately, its integrity. My question is, “When do franchisees take responsibility for their own actions, or in many cases, their own in-actions?”

Too often franchisors are assumed to have done something wrong in the franchise sales process, when in fact, they have been diligent throughout the process. Certainly, that does not mean there aren’t franchise sales professionals taking shortcuts and providing misleading financial performance representations. I’d be a fool not to acknowledge that this occurs! But in having surveyed hundreds of franchisees that have failed over the past five years, I have discovered a multitude of issues that may have contributed to franchisee failure. And, in only a handful of cases did these franchisees complain about false promises or improper disclosure from their franchisor.

Some of the issues that may have contributed to franchisee failure include franchisees’ lack of general business skills, little or no emotional support at home, personal or family members’ substance abuse, and as a result of just sitting back and waiting for business to come to them. With this in mind, I believe franchisee training should address business 101 skills and franchisees need to understand the necessity of grassroots marketing. With respect to the “family and personal” issues, although franchisors cannot and should not be family counselors, many do promote their franchise as a family, and as such, should attempt to identify problems when franchisees begin to show signs of failure. At least they should keep their eyes and ears open for troubling signs outside operational issues.

As we’re discusing franchise failure, I would be remiss in not first referring to my own personal experience as a franchisee.

The following is the actual LinkedIn discussion along with a few key responses. As we have always done in the past, the responders are kept anonymous and are only identified by their Linkedin position statement or by a review of their LinkedIn profile. As always, your comments are encouraged and should be submitted in the section provided below this post.

Franchising – Have you bought yourself a prison sentence?

I have recently had a number of discussions with people who had been looking to improve and secure their futures by investing in a franchise, a proven business model that, whilst perhaps not leading to a grandiose life style, should offer an honest income and self fulfilling future.

Acknowledging that there are many successful franchise opportunities, however I have been shocked by the revelations that have unfolded through my discussions. In some cases, plights of despair, with franchise agreements being sold on the pretence of realistic earning that do not even come close to reflecting reality. Many feel conned and trapped by lengthy contracts, weighted heavily in favour of the franchisor, but struggle through with acceptance because they are not necessarily dependant on the income. On the other hand, some find themselves in serious financial difficulty, with dwindled saving, remortgaging and further borrowing to survive and support a non viable business, with no easy exit and the threat of legal action for non conformity or failure to keep the business going.

If you were running a small business and it turned out to be a non viable proposition, you would most probably take the decision to close it down, learn from the experience and move on. However, one franchisee told me that they had “bought themselves a prison sentence”. As a result of the franchise they had no funds remaining to fight a case or exit from the business and were fearful of their harsh and unsympathetic franchisor.

Senior SEO and Marketing Consultant provided some perspective from outside the franchise community:

“This tragedy speaks to two serious issues that are not in fact confined to the franchise business model, yet are, due to contractual agreements and financial outlay up front, most often more severely felt.

First there’s the issue of false / misleading and otherwise deceptive sales tactics used by unscrupulous people.

The second is people wanting to buy a dream more than a business – people who truly do not comprehend the complexities or depth of commitment required in running a business in any economic situation, let alone our current economic landscape. These people almost always do little true due diligence in just about any aspect of a business model.

While many of these people are more vulnerable to unscrupulous sales tactics (as in they don’t bother to hire a accountant to do an in depth accounting, or a business attorney / barrister to review the terms), just as often many buy a business that they are not truly passionate about or think it won’t involve 60 hour work weeks at certain points.

While we can not condone unscrupulous business sales practices, we need to truly hold those looking to buy a franchise or ANY business accountable for their footwork and business sense.”

A Director of Development at a National Franchisor submitted a very detailed response:

“Given the current conditions, I think the question makes for an excellent discussion. Since no direct question was posed, I’m responding to your general request for comment regarding what I paraphrase as franchisees who buy a franchise which is not viable and then feel trapped by the terms and of the franchise agreement. For me, you’re looking at three components: (1) integrity of the selection process (sales process), (2) performance of the franchisor and franchisee, (3) contemplations on the missing “no fault” termination by the franchisee (the prison).

1. The sales process is not a yes/no or right/wrong proposition. Each franchisor is defined by a number of characteristics: lifecycle, capitalization, experience, management team, strategy, customers, etc. Likewise, each prospect has different personal goals, experience, talents, discipline, and aptitude for being a franchisee within the confines of a system. Alignment between the Zor and Zee from the onset is critical. I understand the UK does not have Disclosure Laws which makes this process all the more difficult and important. The question every Zee should ask is… am I prepared to fail? In my experience, prospects would rather “make money now” than conduct disciplined due diligence to select the opportunity making them easy prey. See link for more.

2. Mutual Performance is required. Need not be said but was not mentioned in your post. I’m a firm believer that businesses don’t fail for one reason alone but a series of bad decisions over time. With that being said, I’ve found one of the fastest ways to failure for a franchisee is lack of capitalization by the franchisee to carry through a rough opening or difficult time. A solid turnaround often times requires capital that just isn’t available. Franchising is a strategy for growth using other people’s money. Franchisors rarely bailout franchisees.

3. The thrust of your question really is the word “prison” which I can only conclude evolves from the reality that while franchisors can terminate the franchise agreement based on default conditions a franchisee does not have the courtesy of a “no fault” termination. (ie… Franchisee may terminate the franchise agreement/close the business with 60 days notice.) As a franchisor, it’s important to note that we’re building a system with a number of franchisees and only one franchisor. The strength of any system is its size and stability. Allowing franchisees to simply walk away is not always in the best interest of the franchisor, the customers of the brand or franchisees who might be operating nearby. Indeed, a no fault termination could cause havoc for a system at the first sign of danger.

Still, franchisees actually have three exit options: (a) find a buyer (nearby franchisee, someone looking for a new challenge, which can be approved by the franchisor. etc) and transfer the agreement; or (b) request a “workout” from the franchisor; or (c) declare bankruptcy as a franchisor usually reserves the right to legally terminate the Franchise Agreement in the event of bankruptcy or other creditor issues. If the Zor/Zee were aligned and both worked hard to make the business work, the Zor should be able to find a way to let the franchisee out of the deal. More often than not, a reasonable workout can be provided with the franchisor assuming the business or closing it on mutual terms with the franchisee. Workouts don’t work when the franchisee is unwilling to take some/all of the responsibility for the failure of their business. It’s not the job of the franchisor to bail the franchisee out… indeed doing so would cause challenges for the system and tax the successful franchisees that are performing. In all cases, it is very important to clearly review the terms of the agreement and seek legal advice.”

A very prominent franchise consultant provided his perspective:

“I can only add that I’ve been involved in franchising for 30 years and during that time I’ve certainly met unhappy, disgruntled and failed franchisees — and some who failed because they selected faulty franchise systems and didn’t necessarily do anything wrong themselves.

Fact is: Not all franchise companies are created equal. Some are better than others.

The thing that always gets me is the failed franchisee who is boo-hooing because they’re “held prisoner,” they had no options, they “bought a job,” they didn’t know any better, they were misled, even lied to . . . come on now. It’s possible that happens to some of the people some of the time — but it doesn’t happen all that often EXCEPT to people who allow it to happen.

People don’t want to accept that there are no guarantees. They think they should be able to buy a franchise and be wildly successful just because it’s a franchise. They’re shocked to find out that it doesn’t always work that way. And if you ask them how much homework they did, who they asked about the opportunity, did they ask others: “Is this the same as buying a job?” . . . “Do you feel imprisoned by the franchisor?” . . . “Do you think you were misled about how much money you can earn?” . . . etc. etc. etc, it turns out they didn’t do any (or much) real homework.

Thanks to the recession, we may be coming out of the Age of Entitlement, and that will benefit franchising, network marketing, and all other forms of business.”

A Founding Partner of a Media Business provided his perspective based upon prior ownership of a franchise:

“My wife and I owned a franchise on the East Coast for a while. We used it as a transition from the corporate world to getting the courage to do “our own thing” and form our own business. Here is my take on franchises (we investigated 10 franchises before buying one specific franchise): we dealt with a really good, top-notch franchise consultant, by the way:

1. You’re essentially using your capital to “buy” a new job or career. It just comes wrapped in a business model which may or may not work depending on your region, local area, local culture, and most important, your level of effort and seriousness.

2. As long as you’re a franchisee, you will be paying rights, royalties, percentages of your hard-earned income, to a franchisor. That money comes off your top line, by the way.

3.Some franchises are innovative and create significant improvements in their products or services; others have founders who lose their excitement or will to develop innovations when they’ve made their money, BUT you’re still paying royalties and fees to them.

4. Many franchises and franchise types are profitable only if one obtains employees from the bottom of the economic barrel, because they must pay “bottom of the barrel” wages in order to break even or make a profit. That level of employee is often undependable, turnover of employees is inordinately high, and one often spends days without adequate staffing when employees don’t show up.

5. Because one hires from the bottom of the economic barrel and is paying not much over minimum wage, one feels (at least we felt) that we were exploiting people.

6. Finally, “owning” a franchise, because of the often restrictive nature of the business model, the marks, the methodologies, is just as often about NOT being in charge of your own business as it is about being in charge of your business. When all else fails, read my comment number 1 above.”

Last, an entrepreneur of what appears to be an independent business responded:

“Isolating individual experiences and calling that a pattern or problem with franchising might be a little misleading. It’s not a perfect world and if you have 100 of anything, a certain percentage of that number will not pan out for an infinite number of reasons. there are a lot of bad franchisors out there, and there are a lot of bad franchisees. As for the bad franchisees, a good franchisor should 1) never should have awarded to them and agreed to their locations etc and 2) some franchisees never follow thru on the execution and hard work.”

Need additional food for thought? Here’s another interesting article.

*This post was originally published on this site December 2010.

Apps Offer Sex Appeal in Mobile Marketing, But SMS Still King!

January 25, 2012 ·

The following is a guest post from franchise friend, Todd Salerno, Vice President Sales, PowerPlay Mobile, a leader in mobile marketing, providing unique technology that businesses rely upon to connect with customers in real time. I first met Todd at last year’s Franchise Consumer Marketing Conference in San Francisco where he facilitated a panel discussion on social media marketing where I was a panelist. Just this past weekend I visited with Todd again – this time at Franchise Expo South in Miami.

In a recent webinar produced by FranSummit and presented by Jeremy LaDuque, CEO at ElementsLocal, we discussed the continued trend towards mobile marketing dominance. We learned that it is projected that by 2014, more people will access search with their mobile device than any other electronic device. That’s less than two years away! With that in mind, and in my continuing effort to provide integrated franchise marketing solutions, I asked Todd to provide some quick insight into mobile marketing. Here’s what he had to say…

“Just to put a fine point on the title of this post, it’s worth emphasizing – while app’s offer sex appeal in mobile marketing, SMS is still king! With 87% wireless penetration in the United States, and still far less than half of US consumers using smart phones, more companies and organizations are using the medium to reach out to existing and potential customers.

SMS is the most effective channel for marketers because of its simplicity, familiarity, and unbiased reach. Virtually all phones are SMS capable, which means the channel can reach 5 billion subscribers worldwide. A study by ABI Research finds that consumers worldwide will send more than 7 trillion SMS messages in 2011, indicating a huge opportunity for marketers. And, according to Nielsen Mobile, the average consumers sends 600 messages per month compared to using less than 200 voice minutes.

So what does that mean for the franchise owner and groups? It means you need to contact customers and potential customers through their preferred communication. SMS is growing at rapid rate and businesses are starting to take notice. Many national chains are already utilizing SMS to bring customers back into their stores to create higher sales volumes and keep them engaged. The best part about it, is that once the business has the consumers opt in for their program, they can keep reaching them.”

About PowerPlay Mobile

With over 30 years of marketing and mobile experience, PowerPlay Mobile helps businesses immediately capture the SMS market. They understand marketing and the power direct connection between franchisees and customers. In summary, SMS works. The ROI on SMS can be anywhere from 5X-20X greater than traditional media, online display, and email marketing. Powerplay Mobile has the ability to:

Reach Customers who do not have a smartphone
Reach Consumers who you have not engaged with recently
Monetize interactions through incentivized offer paths
Add the preferred channel of communication for your customers
Drive Sales through coupons and deals
Create the program you want

Todd Salerno may be contacted by phone at 704-288-0435 or by email at todd@powerplaymobile.com. Be sure to ask him about a free consultation!

Social Media: A Bridge Between Digital and Real Worlds

January 24, 2012January 25, 2012 ·

Businesses are under pressure to crack the social media code. There’s all those tools and platforms to harness, and all those best practices to adopt. Staying on top of it is exhausting. Staying ahead of it is almost impossible.

This was the lead-in to an interesting interview I recently read with Facebook’s, Paul Adams, Global Brand Experience Manager. Adams explains how a simple commitment to value can unravel the complications of social media. He says the key is to understand and serve basic human behavior.

Will we get to a point where “social media” is not an online thing, but a bridge between the digital and real worlds?

Paul Adams: “I think we’re already seeing it happening. We see Facebook, Twitter and Google Maps stickers on business windows all over town. I do think this is where it’s headed. As I mentioned earlier, social media should be like electricity. It’s there, powering everything, but we don’t really think about it.

Our phone, or whatever we carry around with us, will probably be our primary source and producer of social media data, so it’s important that when we use it, we’re not burdened by its place in the ecosystem — for example, by seeing constant privacy controls or too many invasive alerts.

Fundamentally, the phone collects a number of datasets that other devices don’t. It knows who we communicate with the most, who we care about the most — because it knows who we call and text most often — and it also knows where we are, where we’ve been, and probably where we’re going. And in the near future, it will know the things we buy.

Mobile is going to be a very disruptive space, and I’m not sure how it will evolve. Rather than try and predict which technologies will be dominant, I think the safer bet for businesses is to understand how these technologies will support human behavior and how they will help people do things they are struggling to do today.”

I don’t know why, but I immediately thought of the great Simon & Garfunkel song, Bridge Over Troubled Waters.

Read the full interview HERE.

*This post was originally published on this site March 2011.

Franchise Failure – What Would You Do?

December 30, 2011December 30, 2011 · 10 Comments ·

The following is an excerpt from a recent article on CNBC.com about business failure. The article, Five Businesses That Did Not Survive 2011 included one business that was a franchise… actually, a franchisor, Just Mouldings. The excerpt about Just Mouldings demise was subtitled, “We Did Everything Right”.

In my ongoing dedication to franchise success at all levels, I always attempt to analyze why a franchise business succeeds, and why one would fail. As we work our way out of economic uncertainty I’m sure we’ll have more and more opportunity for analysis, and as the excerpt details, we’ll see more identified as business failure due to the economy… which was listed as the reason for Just Mouldings’ failure.

In this case, the principals stated, “We did everything right” and I’m sure they truly believed they did. I’m also sure they did all they felt they could do. Especially as they faced an uphill battle of selling a non-essential product in an economy that saw many consumers limit their spending to necessities.

So, let’s put on our thinking caps and dig into our extensive experience in franchising and business management and attempt to define how this franchise could have succeeded. Let’s look at this as a workshop of sorts. After reading the excerpt below, please share your thoughts as to what you might have done differently if you were in the position of leading this franchise.

Certainly, this is not an attempt at diminishing the efforts of the Just Mouldings’ principals. Instead, let’s look at this as an exercise where we can assist other franchisors (and franchisees) that may be facing similar challenges. If, through our collective efforts, we can assist franchise businesses from failing, even if it’s just one, then we’ve accomplished a great deal. And, it may just help someone from losing their life savings, or help franchisees within a failing franchise system cope and survive despite franchisor failure.

‘We Did Everything Right’

Just Moulding, based in Gaithersburg, Md., sold and installed decorative molding. It opened in 2004 and closed last April.

AT ITS PEAK Mark Rubin and Kevin Wales started with a single workshop that handled small jobs larger installers did not want. In 2007 things were going so well they decided to sell franchises in the business and raised $700,000 from 21 investors. After Mr. Wales left the company in 2010, Mr. Rubin’s father-in-law, Richard Hayman, took over as president. Soon after, sales increased by 20 percent and the company became profitable.

WHAT WENT WRONG The recession. The company, Mr. Hayman said, sold a product that people wanted but did not need: “It was crown molding, not a furnace or a roof.” And while the business had the high legal and accounting costs associated with selling franchises, it had sold only three by the end of 2009. Potential franchisees had trouble raising the $100,000 to $250,000 needed to get started.

LOOKING BACK “We did everything right,” said Mr. Hayman, who sank $470,000 into the company. “We hired the best people and had a great product. We could not overcome the bad economy.” He and Mr. Rubin declined to discuss what they are doing now.

Unique Franchise Model Raises Questions…

December 29, 2011December 29, 2011 ·

As most everyone in franchising knows, the Chick-fil-A franchise opportunity is quite unique, especially as compared to thousands of other franchise opportunites across all industry segments.

It appears Chick-fil-A has been quite successful with this unique business model, so why haven’t more franchisors followed suit? And, for the ones that have, why haven’t they succeeded?

With respect to a recent article’s reference to average franchisee profits, are there potential issues with Financial Performance Representations in the franchisor’s Franchise Disclosure Document?

Here’s a thought as I compare Chick-fil-A to other franchises… Should Chick-fil-A really be considered a franchise?

Hey, don’t get me wrong… I admire a company that affords individuals the opportunity to earn significant income, provides a great product and customer experience, and stands by its convictions (Closed on Sundays for religious reasons). My questions are entirely focused on the franchising aspect. Is it really a franchise?

Is the Chick-fil-A model more successful from the perspective of failed locations than other franchise chains?

From a business standpoint it appears there is much to be learned from Chick-fil-A. So, why aren’t more franchisors developing similar business practices, even beyond the franchise practices.

Looking to keep this positive… and really looking forward to all thoughts, insight and perspective!

One-size-fits-all Social Media Solutions… A false prophecy!

December 17, 2011February 20, 2012 ·

As could be expected, many within franchising entered the year determined to make things happen. As also could be expected, many turned to social media, believing it could be the answer to improving sales at the unit level, increasing interest in their franchise opportunity, and considered social media a low or no-cost alternative to what they’ve done in years past.

Unfortunately, many have failed in their social media efforts. The reasons? Well, many did not understand the ins and outs of social media marketing. Some didn’t even understand the basics of the most fundamental social media; Facebook, LinkedIn and Twitter. And others failed because they were just not 100% committed to the effort. But, are these the real reasons they failed?

Well, as you may have guessed, the answer is, “No!” Ultimately, failure in social media is a direct result of failing to plan. Referring to the old adage, “Failing to plan, is planning to fail” causes me to shake my head in bewilderment at the statements posted in many of the online discussion groups recommending what clearly points to one-size-fits-all social media solutions. How much planning goes into a one-size-fits-all solution? How much commitment actually goes into a one-size-fits-all solution from both the consultant making the recommendation and the client that signs on? How much does a one-size-fits-all solution address outside the realm of the basic social media platforms? I don’t believe it’s ironic or a coincidence that the same questions I pose here are similar to the reasons many fail in their attempt to utilize social media.

Success in social media takes hard work. It takes a well-defined strategy based upon a clear, concise understanding of objectives and desired results. It takes a firm commitment of dedicated resources in both time and money. It takes knowing who the target audience is, where they congregate and communicate online, what messages need to be delivered to create interest, and seperately, to create a call for action. It takes full comprehension of a contingency plan based upon what if…? In essence, it takes planning!

Brian Solis, author the best-selling book on social media, Engage!, and Fast Company expert blogger, recently wrote an article on this very subject, In Social Media, Failing to Plan, is Planning to Fail. He wrote, “I’ve received a series of inbound requests for comments based on a report from Gartner, an IT analyst firm, that estimates as many as 70-percent of social media campaigns will fail in 2011. There are a series of discussions hitting the blogosphere and the Twitterverse exploring this very topic, some elementary and others on the right path. I contacted Gartner earlier this week and the problem is, that this data isn’t new at all. In fact, these discussions are fueled by information originally published in 2008 and in early 2010. Yet another example of the importance of fact-checking in the era of real-time reporting, yes, but, when I paused for a moment, I appreciated the timelessness of this discussion.

Are many of the social media programs in play yielding tangible results?

No …

Are they designed to impact the bottom line or are they tied to meaningful business outcomes?

No …

The truth is that you can’t fail in anything if success is never defined.”

To franchisors, I suggest, before choosing what appears to be a one-size-fits-all social media solution, take the time and expend the effort to develop a social media strategy that not only reflects your current status, but one that can evolve as your system grows. And, be sure to involve your franchisees as it is essential that local objectives to drive sales are integrated in the overall plan that may also include franchise development objectives. Keep in mind, many plans will include multiple objectives that may require that different social media be utilized for optimum results. And don’t forget to integrate your social media plan with your overall marketing and development plans!

Solis concludes his article, “Success is not a prescription. There isn’t one way to excel. That’s the point. Success requires definition based on intentions, goals, and mutual value … across the organization from the top down, bottom up, inside out and outside in. Success is defined departmentally and also at the brand level. There’s much to do …”

Read the complete article HERE.

* This post was originally published on this site July 2011

“Social Media is not applicable to us!” – How would you respond?

December 6, 2011December 6, 2011 ·

Earlier this year, Brett Newman, from the Franchise Opportunities Network, responded to a Linkedin discussion with a question relating to social media acceptance that I hear all too often.

“After attending a few social media presentations and roundtables, I heard an important contact dismiss social media as “not applicable to us”. I understand this to mean that he didn’t think that social media could make an impact on franchise development or franchise lead generation.

While I don’t agree, I wasn’t in a good position to challenge this view from this contact.

If you heard this from someone, how would you respond?”

My response…

“Very interesting, but not all uncommon. I probably would have quoted Socialnomics author, Erik Qualman, who also happens to be the person behind the Social Media Revolution videos – “Social Media ROI is that you’ll still be in business five years from now!”

Once I stated that, I would probably state that utilizing social media is not a one-size-fits-all strategy, nor is it easy to use effectively. I would also indicate that social media, in order to be effective takes serious planning, and should be integrated with other aspects of the business for optimum results. Last, I would reiterate that social media is a communications tool, and as with any tool, it takes practice and hard work to utilize it correctly, and effectively.

If that still doesn’t at least get the person to pause and consider the options, then I would believe the person is afraid of social media just as many are afraid of the unknown. Or, I would tend to believe the individual isn’t willing to put in the effort which lends towards complacency or laziness.

I believe this is really no different than people continuing to use ledgers instead of an accounting software. Or, the many that were phobic about using computers and word processing programs and continued utilizing IBM Selectric typewriters. How many times did we see someone walk away from the large Xerox copier because they didn’t know how to load the paper? In all these cases, as with social media, is it fear, complacency or laziness… or really a combination of all three to varying degrees?”

Please share YOUR thoughts!

*This post was originally published on this site February 2011

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